Benefits in kind question, AAT practice assessment 1
MeganHolder
Registered Posts: 1 New contributor 🐸
in Personal Tax
Hi all,
Can anyone help with how I work out the below question please?
I cannot get back to the answer AAT quote.
Many thanks!
Can anyone help with how I work out the below question please?
I cannot get back to the answer AAT quote.
Many thanks!
0
Comments
-
Hi @MeganHolder
I hope you are well?
With this question there are rules to remember before you can answer the question.
First it is recognised as an Expensive Accommodation because it's worth more than £75,000
Secondly when it is a property question always remember to use Market Value of the property then minus it by £75,000.
Next you need to know the HMRC Official Rate of Interest which is usually given to you in the exam.
Finally you need to work out which is greater the Annual Value or Rental Payments. Then you need to work out the difference between Annual Value and Rental Payments
Now we will answer the question:
1 and 2) £295,000 - £75,000 = £220,000
3) £220,000 x 2.25% = £4,950
4) Annual Value = £7,200
Rental Income = £500 x 12 months = £6,000
The difference between Annual Value and Rental Income is £7,200 - £6,000 = £1,200.
Final step - Add this £1,200 to the earlier calculation of £4,950. This should give you £4,950 + £1,200 = £6,150
Hope this helps you out. Also if okay with you could I use this question and answer as a sample to other places.
Many thanks
Shamil0
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